German pharma firm’s IP scheme ‘avoided billions in tax’

US senator lays into big pharma over ‘Republican-enabled’ tax schemes | Patents for cancer treatment Keytruda allegedly moved offshore.

MSD, which is known as Merck in the US and Canada, has dodged paying billions of dollars in taxes on the product in the US by “holding patents in the Netherlands and manufacturing the drug in Ireland”, according to information obtained by  Reuters.

The information was contained in a letter from the chairman of the US Senate Committee on Finance, Senator Ron Wyden, addressed to MSD.

Wyden had  written to both MSD and Abbott, demanding that they comply with the committee’s investigation into the tax practices of big pharma.

Both companies have “thus far stonewalled the committee and refused to provide specific information related to where it books profits from US drug sales,” wrote Wyden.

The shifting of profits offshore was aided by a law brought in by the Trump administration, he indicated.

“The 2017 Republican tax law has encouraged and rewarded Big Pharma’s shifting of profits offshore, allowing companies like [MSD] and medical device company  Abbott to avoid billions of dollars in taxes on US prescription drug sales,” continued Wyden.

In a statement emailed to Reuters, MSD said: “Prior to today, we have received two letters from the Senate Finance Committee requesting responses to questions around our tax rate, and in each case, we have cooperated and responded with information that we believe appropriately addressed their inquiries.”

Sales of Keytruda, MSD’s top-selling medication, grew in Q2 2022 grew by 26% to $5.3 billion, the company reported this week.

In 2018, a  Reuters investigation revealed that big pharma firm  Abbvie, maker of bestselling Humira, parked dozens of the drug’s patents in Bermuda to benefit from the country’s policy of zero tax on corporate profits.